Krugman: Bitcoin Is Barbaric

We're 'digging our way back to the 17th century'

(Newser)
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Economist John Maynard Keynes called gold the "barbarous relic"—and it has a lot in common with Bitcoin, writes Paul Krugman in the New York Times. Right now, both are being collected at high cost. In Papua New Guinea, the Porgera open-pit gold mine is a leading producer worldwide, but it's also a center for terrible abuses, both of human rights and the environment. It keeps functioning because of gold's soaring value—even though the printing press has long meant "unlimited amounts of cash could be created at essentially no cost."

After the toil of getting it, gold sits in vaults "doing nothing." Meanwhile, there's the Bitcoin mine in Reykjanesbaer, Iceland, which is expending energy "to create virtual objects with no clear use," Krugman writes. "Gold, after all, has at least some real uses ... but now we’re burning up resources to create 'virtual gold' that consists of nothing but strings of digits." Why the effort for gold and Bitcoin? For one thing, there's the unfounded fear of the debasement of government-backed currency. And with Bitcoin, there's "the sense that it’s high-tech and algorithmic, so it must be the wave of the future." But really, we just miss "the days when money meant stuff you could jingle in your purse": We're "digging our way back to the 17th century." Click for Krugman's full column. Or over at the Washington Post, Timothy B. Lee says Krugman just doesn't get a key element of Bitcoin.

In this April 3, 2013 photo, Mike Caldwell, a 35-year-old software engineer, holds a 25 Bitcoin token at his shop in Sandy, Utah.
(AP Photo/Rick Bowmer)

Gold, unlike BitCoin, can not be created out of "thin air" and to extract gold and mint it into a coin or bar form is anywhere from $350 to close to $1000. per ounce depending where it is mined, refined and minted. BitCoin, however, has no substantial intrinsic value; it's mostly extrinsic - basically what the "market" thinks it's worth. BitCoin is the quintessential epitome of fiat money - it's created out of thin air based only on what people think it is worth.

Carl Barron

Dec 26, 2013 12:31 PM CST

Only ones who don't like Bitcoin are Banksters and Corrupt Governments.

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